It has long been the law that creditors are rarely entitled to contractually prohibit a debtor from filing for bankruptcy, whether such restriction is contained in the debt instruments or in the corporate governance documents. In contrast, governance provisions which condition a bankruptcy filing on the vote or consent of certain equity holders that are unaffiliated with any creditor are frequently enforced. Many equity sponsors, for example, wear two hats: they are both shareholders and lenders to their portfolio companies.
In Nortel Networks, Inc., Case No. 09-0138(KG), Doc. No. 18001 (March 8, 2017), the Delaware Bankruptcy Court ruled on the objections of two noteholders who asked the Court to disallow more than $4.4 million of the $8.1 million of the fees sought by counsel to their indenture trustee. Given the detailed rulings announced by the Court, the decision may establish a number of guidelines by which future fee requests made by an indenture trustee’s professionals will be measured.
Matters Handled by the UCC
Introduction
The Alberta Court of Queen’s Bench decision in Redwater Energy Corporation Re, 2016 ABQB 278, written by Chief Justice Neil Wittmann, clarifies that the provisions of the Bankruptcy and Insolvency Act (BIA) addressing the environmental liability of trustees render certain provisions of provincial regulatory legislation addressing wells and pipelines inoperative to the extent they conflict with the BIA.
“The question that he frames in all but words
Is what to make of a diminished thing.”
Robert Frost, “The Oven Bird”
In a significant expansion of the potential risk for distressed claims traders, the Delaware bankruptcy court has recently ruled1 that traders who engage in insider trading may have their claims subordinated to equity, and that traders who amass claims sufficient to block a plan of reorganization owe fiduciary duties to all other creditors and shareholders during plan negotiations.
In Rieger Printing Ink Co, 2009 WL 477541 (Ont S.C.J. [Commercial]), the Ontario Superior Court of Justice dealt with a party's right to protection against selfincrimination in relation to an examination held under section 163 of the Bankruptcy and Insolvency Act, R.S.C., 1985 c. B-3 ("BIA").
In Bank of Montreal v River Rentals Group Ltd [2010] ABCA 16, the Alberta Court of Appeal had to consider the acceptance of a higher bid made after the tender closing date.
In a recent decision of the Ontario Superior Court of Justice, Re Smurfit-Stone Container Canada Inc., Justice Pepall examined the conflicting interests that arise where companies within a group of restructuring companies have made intercompany loans to one another, and where the board of directors mirror each other in each subsidiary.
Recently, in Re AbitibiBowater Inc., the Province of Newfoundland sought a court order granting it access to the electronic data room of Abitibi created for the purpose of dissemination of certain non-public financial and operation information to its counsel, certain creditors, and the Monitor. The Court denied the Province’s application on the basis that it could not prove itself to be a legitimate stakeholder of Abitibi, and on several policy grounds.
Over the last two years, with the fluctuations in the economic market, commercial real estate in distress has become a lively topic among insolvency practitioners and even in court decisions.